Purchasing is a Process NOT an Event
First of all, it’s important to understand that purchasing a house is a process not an Event. People generally don’t wake up one morning, without any preamble, and go buy or sell a house. lnstead, the decision to buy and sell an item as large as a home takes place over time.
In fact, purchasing anything — even a chocolate bar is a process and not an event. While the length of the process, and the thought that goes into each stage of the process, may differ. Depending on the kind of product you’re purchasing the stages themselves are pretty universal:
- You discover that you have a need( e.g. your present living Arrangements are inadequate)
- You decide to do something about that need (e.g. you decide to sell and/or buy a home)
- You consider your options (e.g. seII yourself or use an agent; buy a brand new home or buy a resale, etc.)
- You choose an option (e.g. choose agent John Doe to help buy a resale)
Purchasing a Home
Your Financial Responsibility
Make Your Mortgage Payments on Time
You can make your mortgage payments monthly, biweekly or weekly. But, whichever timetable you’ve chosen, it’s important to always make payments on time. Making late payments is called delinquency. Delinquency may result in late charges and negatively affect your credit rating. Failing to make payments can even lead to very serious consequences, like foreclosure.
A good way to prevent late payments is to have the amount automatically deducted from your account every month. It’s also recommended that you keep at least three months’ worth of mortgage payments in savings for emergency situations. If you are having trouble making payments, discuss the situation with your lender.
Plan for the Costs of Operating a Home
Besides your mortgage, property taxes and insurance, operating a home has many other ongoing costs. Maintenance and repair costs are at the top of the list. There may be other costs as well, for example a security alarm, snow removal, or gardening. If you have a condominium or strata, some of these expenses may be included as part of your monthly maintenance fee.
Save for Emergencies
Even when you can do repairs yourself, there are costs. When you have to pay for repairs, the costs are higher. As your home ages, it will need major repairs or replacement — this happens to every building. For example, when you bought your home, you might already know that the roof will need to be replaced in a few years because of its age. These are expected repairs and can be planned for. However, many repairs are unexpected, and can sometimes be costly.
Set aside an emergency fund to deal with unexpected problems ranging from major repairs to illness and job loss. A good guideline is to save 5% of your take-home pay, and to keep the money in a special account.
Live Within Your Budget
Prepare a monthly budget and stick to it. Take a few minutes every month to check your spending and see if you are meeting your financial goals.
Is your Home Safe?
Fire Evacuation Plan
Do you have a fire evacuation plan? A plan means that you make sure everyone in your home knows how to get out from each room, in case of a fire. If your home has a second floor, you need a special escape plan to get to the ground. Check to see that windows have not been painted shut. Although doors and windows should always be securely locked, you have to be able to open them in an emergency.
Fire extinguishers must always be easy to reach. If you have a two storey home, there should be a fire extinguisher on each floor. Remember to check your fire extinguishers at least once a year. To help you remember, make a habit of doing it when you set your clocks to Daylight Saving Time. Replace a fire extinguisher that is 10 years or older.
In some areas, it is a legal requirement to have smoke alarms in your home. Whether or not it is a legal requirement, having smoke alarms is an excellent precaution. Check smoke alarm batteries at least once a year.
Carbon Monoxide Detectors
Carbon monoxide is an invisible, odourless, poisonous gas. Carbon monoxide detectors are important to have. They will let you know if there are high levels of carbon monoxide in your home. This can save you from illness, or even death. Check them at least once a year. Make a habit of checking your fire extinguishers, smoke and carbon monoxide detectors all at the same time.
Paper, paint, chemicals and other clutter can be a fire hazard. Make sure these are stored in a safe place. When you no longer need the hazardous materials, you must dispose of them at a community toxic waste center. Never put hazardous materials into the garbage.
Collect your important papers and store them in a safe place — for example, a fireproof box, or a safety deposit box.
Keep a list of emergency phone numbers (including 911, poison prevention line, doctors, relatives, neighbours and friends) close to the phone. Make sure your children are aware of the list.
Besides doing regular maintenance and repairing your home, you might also want to consider renovating or making improvements. These changes will not only make the home more pleasant for you to live in, they may also increase its value.
How Much is Just Right?
When planning renovations, be careful not to go overboard unless you plan to stay in your home for many years. If you are planning to sell your house, make sure that your changes won’t make your home worth a lot more than the other homes around you. The value of your home is closely related to the other homes in your area.
- Learn who “The Players” are in a Real Estate transaction so that you will know who is responsible for what.
- Get your financial picture in focus as soon as possible. Get a copy of your Credit Score to see if there are problems or discrepancies that you need to deal with it.
- Familiarize yourself with the mortgage process.
- Get Pre-Qualified from a Mortgage Lender. Do this first. Your Agent will need your mortgage qualification, and it will significantly strengthen your offer when you find a home.
- Find an Agent that you trust. It is important to do this before you go rushing off looking for homes or you may end up with no representation.
- House Hunting Time! Make a scorecard for each house.
- When you find an acceptable house, write a contract. Not familiar with contracts? You can get copies of contracts for your state.
- Negotiate your best deal.
- Make a formal loan application.
- Arrange for home inspection.
- Arrange for legal representative
- Make moving plans–for an innovative and money-saving approach to moving.
- Secure final loan approval and commitment from the lending institution.
- Do a final walk through of the house.
- Final closing and settlement.
- Move to your new home and begin enjoying it!!